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FSA also looking to limit leverage

  • #1
  • First Post: Jul 10, 2009 7:43am Jul 10, 2009 7:43am
Looks like opening an account outside the US. to get away from NFA won't solve the problem.http://www.e-forex.net/regulatory-ro...Latest+Article
  • #2
  • Jul 10, 2009 8:28am Jul 10, 2009 8:28am
That's the Japanese FSA, which I suspect is of little concern to the vast majority of traders in this forum. I could not find any reference to the UK FSA and have neither heard or read anything about plans by the UK FSA to limit leverage. And if they did, it would not be a cause for great panic anyway. The argument for depositing as little trading capital into a forex account as possible, using the maximum leverage available is not as valid in the UK as in the US (although I accept not completely nullified) because these deposits are guaranteed to an extent by the FSA. Regulation is generally a good thing you see.
  • #3
  • Jul 10, 2009 1:44pm Jul 10, 2009 1:44pm
Quoting birdt
That's the Japanese FSA, which I suspect is of little concern to the vast majority of traders in this forum....
Regulation can be good but it can also be used to steal your liberty and freedoom and to push an agenda as the current administration is doing with NFA.
  • #4
  • Jul 10, 2009 2:52pm Jul 10, 2009 2:52pm
Quoting birdt
That's the Japanese FSA, which I suspect is of little concern to the vast majority of traders in this forum. I could not find any reference to the UK FSA and have neither heard or read anything about plans by the UK FSA to limit leverage. And if they did, it would not be a cause for great panic anyway. The argument for depositing as little trading capital into a forex account as possible, using the maximum leverage available is not as valid in the UK as in the US (although I accept not completely nullified) because these deposits are guaranteed...
Anyway, you are better off trading with a UK broker as the FSA/Government will gaurantee upto GBP 55,000 of your Account.
  • #5
  • Jul 10, 2009 5:58pm Jul 10, 2009 5:58pm
Quoting scooby-doo
Anyway, you are better off trading with a UK broker as the FSA/Government will gaurantee upto GBP 55,000 of your Account.
Given the bad financial status in UK.
I wonder if the UK can or is able keep their word should bad things happen.

May be they will put UK citizen on their priority list.

Another thing is that broker like FXCM-UK claims that they never share account info with the UK/US government. Should things happen, how would the client be
able to claim the lost ?
  • #6
  • Jul 10, 2009 6:23pm Jul 10, 2009 6:23pm
Quoting davidwu61
Given the bad financial status in UK.
I wonder if the UK can or is able keep their word should bad things happen.

May be they will put UK citizen on their priority list.

Another thing is that broker like FXCM-UK claims that they never share account info with the UK/US government. Should things happen, how would the client be
able to claim the lost ?
Bottom line, if they dont keep their word then there would/will be panic withdrawls from brokers and deposit/savings accounts, which would be a disaster. For this reason, i dont think it could ever likely happen.

I wouldnt read too much into the bad financial status within the UK. I have to commercial/bank (currency) trader friends who still have their Jobs and last month received a 12% bonus (each) on a trading balance of GBP 7 Million for June's trading period.

Alpari (UK) Limited does not provide information to the Inland Revenue (UK) unless requested todo so by a court order. However, if you transfer more than GBP 10,000 to your bank account from your broker or anywhere else, then this is automatically flagged by the receiving bank to the IR by default. Its then up to you to explain where it came from and why. This is in-line with European money laundering laws/rules/regulations.
  • #7
  • Last Post: Jul 11, 2009 12:19pm Jul 11, 2009 12:19pm
Quoting davidwu61
Given the bad financial status in UK.
I wonder if the UK can or is able keep their word should bad things happen.

May be they will put UK citizen on their priority list.

Another thing is that broker like FXCM-UK claims that they never share account info with the UK/US government. Should things happen, how would the client be
able to claim the lost ?

FXCM-UK (other providers of spreadbetting accounts are available, no product placement here) have segregated spreadbetting accounts available to UK residents, which by all accounts are identical to the standard platform. According to them, all orders are passed on to the market just the same as the regular account, with the exception that any profits you make are classified as proceeds of gambling which are not taxable. So the IR can look all they want, but they can't get their dirty mits on your cash*. As the accounts are segregated then should it come to it, the accounting should exist for the FSA to compensate you. Although thankfully having never had to do this, I'm not entirely sure of the process. I'll cross that bridge if and when I come to it.

I'm not sure what economic scenario would need to occur for the FSA to default on their guarantee, but I imagine it would be extremely serious. Probably a good short play on GBP, you'd just have to hope your broker didn't go bankrupt to get your profits from it.

Makes me feel quite patriotic actually. I may go and drink 8 gallons of lager and throw some plastic chairs at the police to celebrate. Ingerland! Inger land lalala laa laaa laaaa!!!


* seek advice from a taxation professional, I don't think the "birdt from forexfactory said it'd be alright" defense will hold much weight in a court of law.
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